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DIMENSION DATA

		DIMENSION DATA  25.5% www.dimensiondata.com

Dimension Data Holdings plc (Dimension Data) is a leading global technology company that provides solutions and services that enable businesses to plan, build, support, optimise and manage their IT infrastructures. The company is listed on the London Stock Exchange (LSE) and has a secondary listing on the Johannesburg Stock Exchange (JSE).

Dimension Data’s expertise lies in the technology areas of network integration, converged communications, security, Data Centres and Storage (DCS), Customer Interactive Solutions (CIS) and Microsoft Solutions. The company applies its skills in consulting, integration and managed services to create customised client solutions. It is a global leader in the field of simplifying and consolidating IT infrastructures through Internet Protocol (IP) convergence.

With revenues of US$4.5 billion in the 2008 financial year and in excess of 11 000 employees in over 47 countries, Dimension Data has a global footprint that supports highly personalised regional execution, while leveraging the domain experience and depth of a global business.

In December 2002, R&V Technology Holdings Limited (R&V), a wholly owned subsidiary of VenFin, subscribed to a US$100 million seven-year convertible bond issued by Dimension Data. RFS Finance Limited, a wholly owned subsidiary of VenFin, subsequently acquired 93 970 485 shares in the open market, representing a shareholding of 7% in Dimension Data. In April 2006, R&V elected to convert the US$100 million convertible bond into 188 121 978 ordinary Dimension Data shares. On conversion, the additional shares amounted to 12.2% of the enlarged issued share capital of Dimension Data. 

In 2008, Dimension Data completed the acquisition of the remaining 44.9% of the shares of its Asian subsidiary, Datacraft that it did not own.  The total consideration of approximately US$276 million was funded from a combination of internal cash resources (US$156 million) and the placing of new shares (US$120 million). The placing was fully underwritten by VenFin and Allan Gray (on behalf of its clients). Of a total of 136 121 909 new ordinary shares placed at 44.25 pence, VenFin acquired 98 375 347 (72.3%) resulting in a 25.5% shareholding in Dimension Data in July 2008.

VenFin has an effective shareholding of 25.5% in the Dimension Data Group, held through R&V. 

Overview of the six months to 31 March 2009
Dimension Data has delivered a strong first half FY2009 performance with improved metrics across the majority of the business.  The performance is particularly pleasing in light of the challenging trading conditions in many of the Group’s key markets.  In constant currency, revenue grew by 8% to $1.950 billion while the operating margin improved by 0.7 of a percent to 4.6%, driving a 37% increase in operating profit to $89 million.

The strong appreciation in the US$ against most of Dimension Data’s trading currencies impacted statutory reported results in US$ with revenues falling by 10.2%.  Subsequent discussion of results in this section will focus on performance in constant currency except where noted.    

Excellent execution in the Services business drove overall revenue and profit growth. Services revenues increased 21%, driven primarily by strong Managed Services of 25%. Product revenue growth was muted, reflecting economic realities and decreased client capital expenditure. 
The progress that was made over the last five reporting periods in widening the operating margin continued. Operating margin improvements came as a result of an increase in the gross profit margin from 21% to 21.8% which reflected excellent growth and execution in the Services business and good cost containment. The gross profit increased 11.4% while growth in the overhead base was contained to 6.1%.

Regional performances were strong, with the exception of the Americas.  Australia, Europe and Middle East and Africa all delivered excellent growth.  Europe was an outstanding performer in the period, delivering strong growth in revenues and a doubling of operating profit.   Asian revenues declined marginally due to lower capex expenditure from its global financial services and multinational clients. However, growth in the Services revenue base and a focus on cost management helped to deliver a strong increase in operating profit.  The effects of the financial services industry downturn in the Northeast of the US severely impacted the Americas region and led to a realignment of the cost base in the US. 

The Systems Integration (SI) business delivered a strong performance with a 3% increase in revenues and 10% increase in gross profit.  The Group’s lines of business continue to be well positioned in the current economic climate to help clients reduce costs and improve productivity and efficiencies. 

The Network Integration line of business performed well, with outstanding performances in Middle East and Africa, Australia and Europe being offset by poor performances in the Americas and Asia. Network Integration-related Services performed strongly with growth here offsetting the lower Product revenues.  The Converged Communications, Microsoft Solutions and Security Solutions lines of business all grew but performance in the Customer Interactive Solutions line of business was disappointing as spend on large call centre deployments was cut and revenues in the Data Centre and Storage business declined. 

Outside the SI business, the Group’s regional businesses - Internet Solutions (IS) and Plessey in the Middle East and Africa and Express Data in Australia - all delivered strong growth.  IS and Plessey delivered good performances for the period and continue to execute on emerging market opportunities throughout the Middle East and Africa.  Express Data delivered a great performance with strong revenue and margin growth.

In January 2009, IS was awarded two telecommunications licences in South Africa permitting the division to self-provide telecommunications infrastructure services in competition with incumbent operators.  These licences should provide IS with the opportunity to expand its client base and market offerings throughout Africa.

Dimension Data completed the acquisition of the remaining 44.9% of the shares of its Asian subsidiary, Datacraft.  Datacraft had been a Dimension Data subsidiary for eleven years and is critical to the group’s growth and expansion of its Asian footprint.  Dimension Data believes the Asian marketplace will continue to offer attractive future growth.

Group cash and cash equivalents totalled US$345 million at the end of the reporting period (2008: US$397 million).

BEE
The black economic empowerment equity transaction concluded by Dimension Data’s South African subsidiary in 2004 continues to deliver favourable results.  The equity vested is 16.025%.

The future
Looking forward, Dimension Data believes market conditions will remain challenging and business visibility uncertain.  There are some signs of stabilisation and the group’s interim results demonstrate a solid platform as it enters the second half of its financial year.  Dimension Data continues to see opportunities throughout its Solutions and Services portfolio, and believes the medium term opportunities are robust.
The group’s diverse geographic footprint insulates it somewhat and provides it with strong local delivery and execution capabilities, which continue to set it apart from its key competitors.  Whilst at present it is too early to call an upturn, the group is optimistic about future prospects and Dimension Data remains well positioned for the long term.